Renault reports operating loss in first half

Paris: French auto group Renault reported on Friday an operating loss for the first half of the year, saying that its global sales had plunged by 16.5%.

Sales had fallen to 1.106 million units, the group said, but also reported that it had generated strong free cash flow with a cost-cutting plan announced in February.

Free cash flow is a key measure of the rate at which the total structure of the company, production operations, other overheads and other factors, are generating a net, current value surplus of income over expenditure.

Renault, which is to publish full results on 30 July, said that these would show a “negative operating margin in the first half” and also that the contribution from companies in which Renault has a stake would also be negative overall.

In the first quarter, Japanese auto maker Nissan had contributed a negative figure of €1.151 billion ($1.62 billion) and Volvo €83 million, Renault recalled.

Last year, Nissan made a positive contribution of €345 million and Renault reported a net group profit of €571 million.

Under a sweeping cost-cutting programme, Renault is reducing its workforce from 129,000 to 120,000 by the end of 2009.

Last week, rival French group PSA Peugeot Citroen reported a fall of 14% in global sales in the first half.

The Renault drop is in broad line with the global market for cars and commercial vehicles, which fell by 16.5% in the first six months.

Renault’s share of the global market was steady at 3.7%, the group said.

In Europe, where the market for cars has fallen by 10.6%, sales by Renault fell by 10.7%. Its market share was steady at 8.4%.